Universal charges into legal P2P

Then charges back out again

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The world's biggest record label is touting a scheme that would permit internet users to swap DRM-free music under a blanket license, according to a report. Universal Music Group's "TotalMusic" program would allow customers of ISPs who signed up to the program to exchange files freely - but only if the ISP signed up.

The report in Digital Music News this week also suggested that UMG was considering forcing ISPs to adopt the program - causing widespread puzzlement throughout the music business. That's because it lacks the technical, legal and financial resources to back up any threats.

Even though newer network inspection technologies give ISPs a much better idea of the activity on their networks - and AT&T recently promised to use it to identify copyright infringement - ISPs have legal protection from mandatory demands. Nor has UMG the resources to engage in a war of attrition, as a glance at the numbers illustrates.

UMG contributed around $3bn in revenue to its parent, the French-based Vivendi group, in the first six months of this year. By contrast, AT&T's "data services" business alone snagged almost $6bn last year (a mere 10 per cent of its revenues), while broadband ISP revenues will swell Comcast's cable business by around $3.5bn this year. And broadband revenues are climbing, while music sales are falling at Vivendi. So while it's the 800lb gorilla of the music business, UMG alone doesn't wield a big stick.

Meanwhile, many file sharers would welcome the end of the Digital Rights Management era, but TotalMusic as reported offers only a murky, semi-legal respite. For example, a file-sharer downloads a UMG track from another file-sharer with a licensed ISP, they would be presumably be OK - but if it's a non-UMG track, then they're liable for a steep fine. And what if UMG tracks make their way to a user whose ISP isn't a TotalMusic subscriber?

Given the ease with which unlicensed music is traded today, P2P sharers are unlikely to take the trouble to identify UMG material, and destinations, on behalf of the record giant - so presumably this is where watermarking and packet detection comes in.

"They'll end going for a subscription scheme, and like all subscription schemes so far, it'll fail. You have to offer everything," a senior industry source told us.

Nevertheless, it's a sign of how far the record labels have come in their thinking in 2007.

As recently as January, recording representatives were decrying blanket licensing as the destroyer of local culture. By June this had tempered somewhat.

And this month saw UMG's new joint boss Rick Rubin was talking up "a subscription model" so good that no one has to use unlicensed services.